2009 (12) TMI 778 - AT - Central Excise

Tribunal reduces penalty for unaccounted scrap, no intent to evade duty. Revenue appeal rejected. Director penalty set aside.

The Tribunal upheld the decision to reduce the penalty imposed by the Revenue on the respondent to Rs. 10,000 for unaccounted scrap found during a factory ... - Issues:Reduction in penalty imposed by Revenue against unaccounted scrap generated during manufacturing process.Analysis:The appeal was filed by the Revenue challenging the reduction in penalty to Rs. 10,000 imposed on the respondent. The Revenue argued that unaccounted scrap of 9875 kgs found during a factory visit amounted to suppression of facts to evade duty. The Revenue cited relevant case laws to support its contention. On the other hand, the respondent contended that they did not account for the scrap as it was an intermediate product never cleared or required to be accounted under Central Excise Rules. The respondent also argued that the department was informed about the use of certain plastic waste exempted from duty. The penalty imposed on the Director was set aside by the Commissioner (Appeals). The respondent further highlighted compliance with Notification No. 5/98-C.E. conditions and cited a relevant case law to support their argument.The Tribunal analyzed the submissions of both parties and found no evidence of intent to evade duty by the respondents. In the absence of mens rea, the Tribunal held that the respondents were not liable for any penalty under Section 11AC. The Tribunal upheld the impugned order, rejecting the appeal by the Revenue. The judgment was pronounced in court on 7-12-2009.